But nasty budget bargaining is still lurking

Richard F. Keevey

On Tuesday the U.S. Senate and House passed another continuing resolution to reopen the government and provide spending authority for all current programs. Promises were also made to address the DACA issue. By the way, no spending reductions proposed by the president last May have happened.

The fiscal year 2018 federal budget proposed by President Donald Trump in May 2017 included massive reductions to nondefense discretionary programs with corresponding large increases for defense and for a "Border Wall." It significantly reduced every social program, with cuts of $54 billion in the first year — and a total of $1.7 trillion over the next decade in mandatory spending cuts, including the Children's Health Insurance Program (CHIP) and Medicaid.

The New Jersey Budget for fiscal 2018 assumes $15 billion in federal aid and would be significantly affected. Proposed reductions were unnecessarily punitive to people in need of assistance. For example, the president's budget eliminated the Affordable Care Act (ACA), initiated block grants for Medicaid — which would reduce funding — and proposed sizeable cuts of 31 percent to EPA programs. Furthermore, there were large reductions in funding for transportation, home energy assistance, children with disabilities, clean water, and supplemental food programs for Women, Infants and Children (WIC) - a program particularly singled out for reductions.

I argued in an op-ed on this site, "…. it will never happen," and suggested we wait until October 1, 2017 to see what happened. Well it is almost February, and so far, pretty good.

Jumping through hoops

Unlike budgets submitted by governors, a presidential budget must traverse through so many hoops that it is highly unlikely to pass as submitted — especially one as draconian as proposed by the president. The federal budget route is so convoluted, I was confident Trump's budget would not be implemented. The presidential budget must be reviewed by two budget committees, numerous authorization committees, 12 appropriation subcommittees — and then a final reconciliation between the House and Senate for each of 12 appropriation bills. Each appropriation bill must then be signed by the president. Unlike most governors, including our governor, the president does not have line-item veto authority.

I observed the only committees that matter are the appropriation committees, and in my experience rational committee chairpersons would prevail.

To date, there are no appropriation bills approved for fiscal 2018, which began on October 1, 2017. Instead, Congress has passed and the president has signed four continuing resolutions (CRs)" — the recent one just approved by Congress is good through February 8, 2018. These CRs essentially allow spending at the same level as the prior year (fiscal 2017), which means no cuts in federal aid to New Jersey or any state. Absent these CRs, or actual appropriation laws, the government shuts down — as it did a few days ago — and, unfortunately, it could happen again.

The reconciliation process

A point of information: Unlike the failed attempts to eliminate the ACA and decrease Medicaid, the reconciliation process cannot be used for discretionary programs (defense and most domestic programs). So, each appropriation bill (or an omnibus bill) requires 60 votes — not a simple majority. Thus, my expectation was and still is that a compromise will ultimately be reached by thoughtful Democrats and Republicans.

A recent contentious point was the renewal of CHIP. By federal definition, CHIP is a "mandatory program" and is not subject to the annual appropriation process. But unlike other mandatory programs such as Social Security and Medicare, which are authorized "forever" unless legislatively altered, CHIP was approved for a specific period that expired. Congress approved temporary funding through March 2018 and some Republicans were using its possible demise as a threat to achieve other goals. Thankfully, CHIP was extended for six years as part of the continuing resolution. As a compromise, the Democrats agreed to roll back several tax laws that were originally intended to help fund the ACA — not a bad trade since these laws were never going to be implemented — and it had no effect on the ACA.

Proposed reductions to other domestic programs, however, are still being used as budget bargaining chips to trade for monies to build a Border Wall and to increase significantly defense spending.

Budget bargaining is dangerous

Similar unnecessary and inappropriate budget bargaining is being used principally to address the pending end of the "Dreamers" to remain in our country. I guess it is part of the budget game, but in this case it is a very dangerous game as Congress is gambling with the lives of almost 800,000 people. This is not only poor budget gamesmanship but is morally reprehensible. I should add that other pending immigration issues could also be solved by abandoning negative rhetoric and misguided political and moral philosophy and developing comprehensive reform that recognizes the basic principles of humanity and fraternity while addressing security.

Presumably, as part of the bargaining surrounding the passage of the CR yesterday, there was some agreement that Congress will schedule the DACA legislation for a vote. Let's hope so — and let's hope it is void of gamesmanship.

Furthermore, the recently enacted tax changes were a major lost opportunity as the law significantly improves the finances of the very rich, and does not properly reform the corporate tax code (which was necessary). It will also increase our annual deficits and our long-term debt by $1.4 trillion.

For those worried about maintaining key programs for the most vulnerable, the news so far is good as Medicaid was not changed; the ACA was retained (albeit there were changes to the individual mandate provisions); CHIP was reauthorized; and there are no reductions to domestic programs.

I trust that enough rational Republicans and Democrats will reach a viable compromise by February — maintaining current funding levels for domestic programs; solving favorably the fate of Dreamers and other immigrants; increasing defense spending but at lower levels; and avoiding funding an expensive wall. The latter is still tricky and might have to be finessed in some fashion because as with all laws the president has to ultimately sign these appropriation bills. Let's hope I am correct.

What a way to run a $4 trillion corporation affecting over 323 million people!

Richard F. Keevey is the former budget director and comptroller for New Jersey — appointed by two governors from each political party. He held two presidential appointments as the CFO at HUD and deputy undersecretary for finance at DOD. He is currently a senior policy fellow at the Bloustein School of Planning and Policy at Rutgers University and a lecturer at the Woodrow Wilson School, at Princeton University.